Traditional banks reject approximately 80 percent of those small business owners who apply for a business loan. Fortunately, there are alternatives for businesses in need of an influx of capital and one of those is a private hard money lender.
Since the Great Recession, getting a small business loan from a traditional bank has been akin to winning the lottery. Well, maybe not quite that remote of a possibility, but for those just entering business, it can definitely feel hard at best and near impossible in some instances. In addition to requiring adequate collateral, you also need a great credit score often above 700, a good cash flow and adequate capital to pay off the loan. Many potential borrowers wonder to themselves, If I had all that, I wouldn’t need a loan! But such is the constraints of our time.
Approximately 20 percent of new businesses survive their first year in business. After five years, the rate of both failure and success stands equal at 50 percent. The number one reason businesses fail is due to lack of initial funding and under-capitalization. This is due to either underestimating costs, overestimating the amount of initial sales with their product or service, or deciding to take the plunge regardless of the available capital, or lack thereof. Because of the inherent risk to lenders, many banks have very stringent underwriting rules when lending to small businesses in order to protect themselves. The irony, of course, is that if these small businesses had more capital, they would have a better chance at succeeding.
For those of you who have been in the small business demise group, its best to remember that every failure improves your next chance at success. Michael Jordan, NBA basketball MVP said it well. “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.”
So Where Does One Obtain a Small Business Loan?
If you have adequate collateral in your business or even in your home, a hard money lender may be the right option for you. These short term business loans can get you up and running, provide the capital you need for expansion, or get you through the low-period of a seasonal business until the customers start rolling in again. These short-term loans are based on your hard-asset so those that may have had some credit issues in the past still have a good chance of qualifying. And the time to funding is much shorter than traditional bank loans, getting you the capital you need in less than a week.
At Level 4 Funding, we work with hundreds of private hard money lenders many of which prefer to invest in small businesses. We offer terms from 3 to 60 months. Call us today for a no-obligation quote.
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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